5G has been widely discussed and widely misunderstood for years now. With the unveiling of Apple's 5G-enabled iPhone 12 models last month and mounting trade tensions between the US and China, we are taking a deep dive into the 5G landscape coalescing across the globe and the national security implications at play.
Speaking with long-time SumZero contributors, Stewart Gronek and Billy Duberstein of Stone Oak Capital, we dig into their respective positions in Rakuten, T-Mobile, and Micron and how they figure in the slow but steady transition to 5G.
Rakuten, the Japanese marketplace services and e-commerce company is developing its own cloud-based virtualized network to overtake incumbent telecoms in Japan and beyond. With over 100 million existing customers in Japan, Gronek believes Rakuten poses an existential threat to bulky, overpriced incumbents such as Docomo, KDDI, and Softbank. By his projection, Rakuten will have a competitive mobile subscriber base by 2032.
"Rakuten will accrue benefits across its ecommerce and FinTech business segments by offering cellphone service plans that are
more competitive with opportunities for monetization that do not exist for incumbent telecom carriers. In addition, Rakuten is able to leverage the innovations achieved as a first mover into a vRAN telecom network by offering this platform to telecom companies, government organizations, and other enterprise customers worldwide which is an addressable market of ¥30 to ¥40 trillion."
T-Mobile, which inherited a deep spectrum portfolio through its Sprint acquisition, is well-positioned to serve the American 5G market according to Billy Duberstein. With lower-priced products and the broadest spectrum coverage, Duberstein believes T-Mobile stands.
"Even without network superiority, T-Mobile will get a lot of cost synergies and improve Sprint’s industry-worst churn towards T-Mobile’s industry-best churn. However, the combined companies now have the deepest 5G spectrum portfolio in the industry."
Lastly, we look at Micron, which will see increased demand for its high-speed DRAM storage solutions in the 5G era.
"New data-heavy applications enabled by 5G in things like gaming, AR/VR, and others will require more memory and storage in cloud data centers and edge computing data centers as well. So, it’s not just about faster phones, but a whole ecosystem of compute-intensive applications that will pull up demand across data centers, PCs, connected IoT devices, etc. in a virtuous circle."
Please download the PDF below to read the full discussion or contact the SumZero Cap Intro team for warm introductions to either of our featured managers.